You just got notice that the state is going to audit your business for sales and use tax.What should you do?

Sales tax audits are like bad blind dates in that you want them to end as soon as possible. However, an audit can cost you a good deal more than a date gone awry.

Okay, maybe you have had this experience: Someone sets you up on a blind date that you just don’t want to go on. It might be your first instinct to make a terrible first impression so you don’t have to worry about a second date. Or maybe you try to get out of it altogether.

​Audits are kind of the opposite. You want to do EVERYTHING you can to have a fantastic first impression. First impressions matter. A former California state auditor said, “Look, auditors go from business to business to business auditing for sales and use tax.” If you show up with a courteous smile and professional demeanor, you will set a good tone for the entire duration of the audit.What should you talk about?

If you are on a blind date and you’re not clicking with the other person, you may not want to give out personal information. Keep it close to the vest unless you’re with someone you trust, right?Unfortunately, you can’t do that in an audit. You are legally bound to give certain information to the auditor or auditors if they ask for it. When they ask for something, give it to them quickly and make sure your records are easy for them to access because you don’t want to seem like you’re hiding anything. This makes auditors dig deeper to try and find discrepancies and errors.Don’t overshare. Don’t give them records they don’t ask for. Don’t put people in the room with them who might make off-handed comments that would spark something and make them dig a little deeper.What about location?

If you absolutely HAVE to go on a blind date and you really don’t want to connect with this person and you think it’s not going to go well, maybe you’re thinking about taking them somewhere with a dollar menu, maybe with some golden arches…nowhere fancy.

With an audit, you don’t want to put the auditor somewhere where it will be hard for them to work. The same former California state auditor above has been in crazy places for audits. People have put him, for example, on a couch with a Great Dane that would loom over him and drool all over the paperwork as he was trying to get the audit done. He has also had to do an audit in a van on the curbside in southern California in summer.

These conditions put auditors in a bad mood, and they will take their time and will go the extra mile to try and find errors. So put them in a good location, well lit, easy for them to do their work. Put them at ease and in a good mood and it will be as painless as possible.